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Lessons learned from a failed poker software business

mattmazur.com

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Re: Lessons learned from a failed poker software business

#61

Post by matt1 »

mikkom wrote: post #59

I think taking down the site was a bad idea, after reading your article, I would have bought it (my pain treshold for random purchases goes somewhere around $20 so if you decide to sell it for under that, please drop a notice). I'm an entrepreneur myself (We sold our company to a quite big company about 1,5 years ago), I think what really went wrong was not the product, niche or anything like that. It was the marketi…

Very good post. I have a lot to learn about advertising. While it's nice when your product sells itself, there's clearly a lot of value in a great advertising campaign. I could have done much better following through after I launched.

I liked the name, but the problem was the three words: all+in+expert. There was a time after it launched where the site came up as #1, but now its faded into oblivion. I thought it succinctly captured what the software was about, but as you said, maybe it wasn't catchy enough.

I'm launching a new site in a few weeks which I'm going to do a few things differently with. The digitalpoint idea isn't bad.

No need for a donation, your advice is far more valuable than $20 will ever be.

Re: Lessons learned from a failed poker software business

#62

Post by dhimes »

Thanks for posting. I'm finding myself in a similar situation, but I've adopted a different strategy. I'm writing a second, semi-related app that I hope will help build the brand equity. There are a lot of insightful comments in this thread.

My marketing and advertising are weak.

Re: Lessons learned from a failed poker software business

#63

Post by Tichy »

sokoloff wrote: post #40
Tichy wrote: post #21

Earlier quoted context omitted.

Even if you can be successful without advertising, it seems a bit silly to be against it. If you know that by investing 100000$ in advertising, you can earn another 1000000$ in revenue, why would you not do it? Just because it loses you points in the indie scene? I used to be all negative about advertising, but I changed my attitude since I realized that nature itself relies heavily on advertising. A beautiful flower…

One example answer is that if your gross margin is anything under 10%, you shouldn't spend $100m in advertising for $1mm in marginal revenue. Doesn't happen often in software, of course.

I admit you have lost me here - why should one not make that investment?

Re: Lessons learned from a failed poker software business

#64

Post by cabalamat »

Tichy wrote: post #21
cabalamat wrote: post #17

Earlier quoted context omitted.

> In some businesses, there simply is no other way. For example recently I heard from some online dating services I don't think advertising is necessary for an online dating service. For example, quite a few of my friends are on OK Cupid, and as far as I know they don't do much advertising. "Advertising is a tax for being unremarkable" is a really succinct way of putting it.

Even if you can be successful without advertising, it seems a bit silly to be against it. If you know that by investing 100000$ in advertising, you can earn another 1000000$ in revenue, why would you not do it? Just because it loses you points in the indie scene? I used to be all negative about advertising, but I changed my attitude since I realized that nature itself relies heavily on advertising. A beautiful flower…

I'm not against advertising.

Re: Lessons learned from a failed poker software business

#65

Post by sokoloff »

Tichy wrote: post #63
sokoloff wrote: post #40

Earlier quoted context omitted.

One example answer is that if your gross margin is anything under 10%, you shouldn't spend $100m in advertising for $1mm in marginal revenue. Doesn't happen often in software, of course.

I admit you have lost me here - why should one not make that investment?

Let's say your gross margin is 9%.

You spend $100K in advertising. You get an additional $1000K in revenue, on which you make a 9% profit. You bank $90K profit from this.

You're $10K worse off for having done that advertising.

Re: Lessons learned from a failed poker software business

#67

Post by Tichy »

sokoloff wrote: post #65
Tichy wrote: post #63

Earlier quoted context omitted.

I admit you have lost me here - why should one not make that investment?

Let's say your gross margin is 9%. You spend $100K in advertising. You get an additional $1000K in revenue, on which you make a 9% profit. You bank $90K profit from this. You're $10K worse off for having done that advertising.

OK - not so used to terms like "gross margin" ;-)

Re: Lessons learned from a failed poker software business

#68

Post by time_management »

mattmaroon wrote: post #49
time_management wrote: post #35

I wouldn't consider this a failure. Guessing that you don't want to run into legally shady territory (assuming you're in the US) and start an online gambling site, it's hard as hell to make money in anything related to games, especially public-domain card games. For example, I'd doubt that the designers of card games like FreeCell and Ambition ever made a cent off their inventions. I'll point this out, though: games…

You have no idea how wrong you are. There's a tremendous market for poker-related apps. It's an industry that rakes in at least hundreds of millions annually. If I told you what I made off of this sort of thing in the pre-UIGEA days (and especially before Party spun off its skins sites) you'd shit your pants. Top rakeback providers made 6 or maybe even low 7 figures per month at the pinnacle. The Poker Tracker guys h…

I looked into it a little bit. You're completely right. I was wrong.

I remember looking at the casual games business in 2006 and realizing that there was almost no money in it at the time, but that changed, and Texas Hold 'em is, anyway, it's own beast.

I'm very surprised, though, that the Texas Hold 'em blip is still sustaining. It's a fine game, but you'd think people would get sick of playing the same game after a while, and look into something more adventurous.

Re: Lessons learned from a failed poker software business

#69

Post by mattmaroon »

time_management wrote: post #68
mattmaroon wrote: post #49

Earlier quoted context omitted.

You have no idea how wrong you are. There's a tremendous market for poker-related apps. It's an industry that rakes in at least hundreds of millions annually. If I told you what I made off of this sort of thing in the pre-UIGEA days (and especially before Party spun off its skins sites) you'd shit your pants. Top rakeback providers made 6 or maybe even low 7 figures per month at the pinnacle. The Poker Tracker guys h…

I looked into it a little bit. You're completely right. I was wrong. I remember looking at the casual games business in 2006 and realizing that there was almost no money in it at the time, but that changed, and Texas Hold 'em is, anyway, it's own beast. I'm very surprised, though, that the Texas Hold 'em blip is still sustaining. It's a fine game, but you'd think people would get sick of playing the same game after a…

Well, poker has been popular for over a century. Hold'em has a lot more cachet due to having relatively (for poker) low variance, yet still enough that any clown can win. It's got faster action than anything but a craps table. It takes only a few minutes to learn and can never truly be mastered. It's still got that kinda seedy feel to it. High school kids think a top poker pro is on level with a rock star or pro athlete (I know because I was one for a while and my wife is a teacher).

I think TV ratings have come down a bit, but I'm pretty sure it'll be around for a while. I wish other games like pot limit omaha and badugi were more camera friendly, as they're a lot more skill intensive.

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